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[December 19, 

REYIEW OF OUR FIJiANCES, 



AND OF THE 



j,vn 



REPORT OF HON. S. P. CHASE, 

SEGBETAR Y OF TEE TRE ASTIR Y. 
BY 

Hon. EGBERT J. "i^^ALKER^^ 

LATE SECEETAKY OP THE TEEASUET. /^;' 




\From advance sheets of the Continental Monthly, ^wS^Me^ hj John F. Trow, 50 Greene street. 
New York, at %2> per annum.] 



Our national finances are inyolved 
in extreme peril. Our public debt ex- 
ceeds $720,000,000, and is estimated by 
the Secretary of the Treasury, on the 
1st of July next, at $1,122,397,403, and 
on the 1st of July, 1884, at $1,744,685,- 
588. When we reflect that this is 
nearly one half the debt of England, 
and bearing almost double the rate of 
interest, it is clear that we are approach- 
ing a fatal catastrophe. Nor is this 
the most alarming symptom. Gold now 
commands a premium of thirty-two per 
cent., as compared with legal tender 
treasury notes, and, with largely aug- 
mented issues, must rise much higher, 
with a correspondent increase of our debt 
and expenditures. Indeed, should the 
war continue, and there be no other al- 
ternative than additional treasury notes, 
they will, before the close of the next fis- 
cal year, fail to command forty cents on 
the dollar in gold, and our debt exceed 
several billions of dollars. This would 
result from an immense redundancy and 
depreciation of currency, and from the 
alarm created here and in Europe, as to 
the maintenance of the Union, and the 
ultimate solvency of the Government. 
Indeed, our enemies, at home and 
abroad, the rebels, and their allies in 
the North and in Europe, already an- 

VOL. III. — 9 



nounce impending national bankruptcy 
and repudiation, and there are many 
devoted patriots who fear such a catas- 
trophe. 

That the danger is imminent, is a 
truth which must not be disguised. 
Here lies the great peril of the Govern- 
ment. It is not the rebel armies that 
can ever overthrow the Union. It is the 
alarming increase of the public debt, 
and expenditures, and the still more 
appalling depreciation of the national 
currency, that most imperil the great 
Republic. 

And is the Union indeed to fall? 
Are we to be divided into separate 
States or many confederacies, each war- 
ring against the other, the sport of 
foreign oligarchs, the scorn of human- 
ity, the betrayers of the liberty of our 
country and of mankind ? Can we yet 
save the Republic ? This is a fearful 
and momentous question, but it must 
be answered, and answered now. In- 
action is syncope. Delay is death. 
The life of the- Republic is ebbing fast, 
and the approaching Ides of March 
may toll the funeral words, It is too 
late / 

What then must be done to avert 
the di'ead catastrophe ? Action, imme- 
diate and enei-getic action, in the field 



130 



and in Congress. "Winter is the best 
season for a campaign in the South. 
On — on — on with the banner of the 
Republic, bj' land and sea, and with all 
the reinforcements, from the Ohio and 
Potomac to the Gulf On, also, with 
the necessary measures in Congress to 
save our finances from ruin, arrest the 
depreciation of our national currency, 
and restore the public credit. We are 
upon the verge of ruin. "We are hang- 
ing over the gulf of an irredeemable 
paper system, and its spectral shade, 
repudiation, is seen dimly in the dark 
abyss. The present Congress may save 
us ; but what of the next ? Would 
they, if they could ? "Wlio can answer ? 
Can they, if they would ? No ! no ! 
It will then be too late. Never did any 
representative assembly encounter so 
fearful a responsibility as the present 
Congress. Each member must vote as 
if the fate of the Union and of humani- 
ty depended upon Ms action. He must 
rise above the passing clouds of pas- 
sion and prejudice, of State, local, or 
selfish interests, into the serene and 
holy atmosphere, illumined by the light 
of truth, and warmed by the love of 
his country and of mankind. His 
only inquiry must be, "What will save 
the nation ? The allegiance to the 
Union is paramount, its maintenance 
' the supreme law,' the lex legum, 
of highest obligation, and he who, 
abandoning this principle, follows in 
preference any real or supposed State 
policy, is a secessionist in action, and 
a traitor to his country and mankind. 
Should the catastrophe happen, no 
such paltry motives will save him from 
disgrace and infamy ; and, if he be 
snatched from oblivion, his only epitaph 
will be : Here lies a destroyer of the 
American Union. He did not destroy it 
by bullets, but by votes. He did not 
march against it vnth armed battalions ; 
but, a sentinel, he slept on the post of 
duty, and — ^liis country fell. 

"What, then, can Congress do ? They 
can consider at once this great financial 
question, uninterrupted by any other 



Our National Finances. 

■ Wi 

until there s 



HTb-^s- '^^ 



measure, until there shall have been 
action complete and decisive. But 
two months more remain of the session. 
Not another day nor hour must be 
lost. All admit that something must 
be done, and done quickly. 

What then is the remedy for our 
depreciated and depreciating national 
currency ? The Secretary of the Treas- 
ury anticipated the disaster, and pro- 
posed a remedy in 18G1. I gave his 
bank plan then my earnest and imme- 
diate support. Well would it have 
been for our country if it had then 
been adopted, and gold would not now 
command a premium of thirty-two per 
cent. After a year's experience and 
deliberation, the Secretary reiterates 
his former recommendation, with words 
of solemn import, and arguments of 
great force. His is the chief responsi- 
bility. To him is mainly intrusted the 
custody of the public credit. His is 
now the duty of saving us from na- 
tional bankruptcy. At such a time, I 
would differ from him on such a ques- 
tion, only on the clearest convictions, 
and then only upon the condition that 
I had a better plan as a substitute, and 
that mine could become a law now, 
and be carried now into practical exe- 
cution. If all this could not be done, 
I would supjjort the plan of the Secre- 
tary, as all admit that delay or inac- 
tion is death. If my words be too bold 
or earnest, let them be attributed to 
my profound conviction that the Amer- 
ican Union is in extreme peril, and that 
its downfall involves the final catastro- 
phe of our country and of our race. 
Let no man talk of a separation of the 
Union in any contingency. Let none 
speak now of peace or comjjromise with 
armed treason. Let none think of con- 
structing separate nationalities out of 
the broken and bleeding fragments of 
a dismembered Union. No ; far better 
that our wrecked and blasted earth 
should swing from its orbit, disinte- 
grate into its original atoms, and its 
place remain forever vacant in the vmi- 
verse, than that we should survive, 



Our National Finances. 



131 



with such memories of departed glory, 
and such a burning sense of unutter- 
able infamy and degradation. Fallen 
— fallen — fallen ! from the highest pin- 
nacle to the lowest depth, to rise no 
more forever ! What American would 
wish to live, and encounter such a des- 
tiny ? And why fallen ? From a cause 
more damning than our fate. Fallen, 
let the truth be told, as history would 
• record, because faction was stronger 
than patriotism, and the degenerate 
sons of noble sires extinguished the 
world's last hope, by basely surrender- 
ing the American Union to the foul 
coalition of slavery and treason. This 
rebellion is the most stupendous crime 
in the annals of our race, and its pro- 
jectors and coadjutors, at home or 
abroad, individual or dynastic, are 
doomed to immortal infamy. With its 
demoniac passions, its satanic ambi- 
tion, desecrating the remains of the 
slain, making goblets of their skulls, 
and trinkets of their bones, this revolt 
is a heliograph of Dahomey, and Devil- 
dom daguerreotyped more vividly than 
by Dante or Milton. 

. The plan of the Secretary is clear, sim- 
ple, comprehensive, practical, and effec- 
tive. It is the plan of an uniform circula- 
tion, furnished by the Federal Govern- 
ment to banking associations organized 
by Congress, securing prompt redemp- 
tion by the deposit of the same amount 
of U. S. six percent, stock in the Federal 
custody, the principal and interest of this 
stock being payable in gold. This plan, 
with me, is a necessity, and not a choice. 
It is the plan of the Secretary, and not 
mine, and is therefore supported by me 
from no vanity of authorship. Nay, 
more, it required me to overcome strong 
prejudices against any bank circulation, 
and especially any connected in any way 
with the Government. It is, however, a 
strong recommendation of the plan of the 
Secretary, that the proposed connection 
of the banks with the Government is 
not political, and attended with none 
of the formidable objections to the late 
Bank of the United States. Ever since 



the bank suspension of 1837, I have 
been a buUionist, and sustained that 
doctrine in the Senate of the United 
States, and as Secretary of the Treas- 
ury. The act establishing the inde- 
pendent treasury in 1846, was drawn 
by me, avowedly as a ' specie receiving 
and sjpecie circulating ' institution, and 
to restrain excessive issues by the banks ; 
but it is impossible now to carry that 
system into practical execution. The 
suspension of specie payment by the 
banks and the Government, has been 
forced by the enormous expenditures 
of the war, and the sub-treasury, which 
never was designed for the custody or 
disbursement of paper, has been so far 
virtually superseded. In acceding now,") 
as in December, 1861, to the Secretary's 
plan of a bank circulation, I must be 
understood as haviug changed my 
views in no respect as to banks, but 
that I yield to the great emergency, 
which renders the support of the war 
and of the Union paramount to any 
question of coin or currency. 

The national disbursements for the 
present and succeeding fiscal year, as 
stated by the Secretary, together with 
his remarks on that subject, supersede 
the necessity of any further argument 
in proof of the absolute impossibility 
of specie payments now by the Govern- 
ment. We are compelled to resort to 
paper, and the only question is as to 
the character and extent of the issue. 
It is my opiuion that we should limit 
this paper ciirrency, as far as practi- 
cable, that it may be as little depre- 
ciated now as possible ; so that when 
the rebellion is crushed, the banks and 
the Government may resume specie 
payments at the earliest moment. I 
favor the plan of the Secretary main- 
ly because, by arresting depreciation, 
it would furnish a currency approach- 
ing specie now more nearly than 
can be accomplished in any other 
way, and because, when the war is 
over, it provides the best means for a 
return, in the shortest possible period, 
to specie payments. An irredeemable 



132 



Our national Finances. 



paper currency dissolves contracts, vio- 
lates good faith, and its history here 
and in Europe is a record of financial 
ruin, bankruptcy, and repudiation, of 
frauds, crimes, and demoralization, 
which no fiiend of his country or race 
can desire to witness. The issue of 
treasury notes as a legal tender was 
favored by me as a necessity^ super- 
induced by the rebellion, and as a 
substitute for the present bank is- 
sues. Such notes would be depreci- 
ated much less when made a legal 
tender, and, to that extent, our expen- 
ditures would be diminished, and specie 
payments could, therefore, be resumed 
eventually at a much earlier period. 
Why, then, it is asked, not continue and 
extend that system, rather than adopt 
tbe plan recommended by the Secretary ? 
Because, Congress refusing to jjrohibit 
a bank circulation, such increased is- 
i sues of treasury notes would cause a fur- 
ther great depreciation of such notes, 
to that extent augment our expendi- 
tures, and postpone, perhaps indefinite- 
ly, the resumption of specie payments. 
Gold now commands a premium of thii-- 
ty-two per cent., payable in treasury 
notes ; but, if such issues be increased 
one half, they would fall to fifty 
per cent., and, if doubled, to at least 
sixty per cent, below specie. At the last 
rate, if our yearly expenditures, paid in 
paper, reached $700,000,000, this would 
command but $280,000,000 in gold, 
thus subjecting the Government to 
a loss of $420,000,000 per annum, and 
at thirty-two per cent, discount, $224,- 
000,000 per annum. These notes, it is 
true, bear no interest, which at six per 
cent, on $280,000,000, would save $16,- 
800,000 a year. But as under the Sec- 
retary's plan (liereafter developed) the 
Government would only pay an annual 
interest of four per cent, on this loan, 
the saving would only be $11,200,000. 
Deduct this interest thus saved from 
the $420,000,000 of increased annual 
expenditures, arising from such depre- 
ciation of treasury notes, and the result 
is a net loss of $408,800,000 per annum 



to the Government, from the use of 
such redundant and depreciated cur- 
rency. Surely, such a system would 
soon terminate in bankruptcy and repu- 
diation, repeating the history of French 
assignats and Continental money. 

Nor is it the Government only that 
suffers from such a disaster, but the 
ruin extends to the people. There is 
no' law more clearly established than 
this : that the currency of a country , 
bears a certain fixed jjroportion to its 
wealth and business. If we expand the 
currency beyond this projiortion, we 
violate this law, and will surely suflFer 
the tenible penalties of this disobe- 
dience. This law is so certain and in- 
variable, that, if the expansion beyond 
this proportion should be even in specie, 
the result would still be disastrous. 

This was illustrated during the reign 
of Ferdinand and Isabella, when Spain, 
having oj)ened the virgin mines of 
America, brought the precious metals 
in countless millions within her limits, 
and restricted their exportation by the 
most stringent penalties. And what 
was the consequence ? Mr. Prescott, 
of Boston, tells us in his great history, 
that ' the streams of wealth, Avhich 
flowed in from the silver quarries of 
Zacatecas and Potosi were jealously 
locked up within the limits of the Pen- 
insula.' ' The golden tide, which, per- 
mitted a free vent, would have fertilized 
the region through which it j)oured, 
now buried the land under a deluge, 
which blighted every green and living 
thing. Agriculture, commerce, maku- 
FACTUEES, every branch of national in- 
dustry and improvement, languished 
and fell to decay ; and the nation, like 
the Phrygian monarch who turned all 
that he touched into gold, cursed by 
the very consummation of its wishes, 
was poor in the midst of its treasures.' 
Such was the effect of violating the 
law which regulates the ratio of money 
to wealth ; such the consequence of a 
superabundant currency, even in specie. 
The result was that Spain, which had 
been the most prosperous nation of Eu- 



Out National Finances. 



133 



rope, and whose products and manufac- 
tures had supplied the markets of the 
workl, lost nearly all her exports, and 
was forced to resort to the prohibitory- 
system. The cost of living, of work- 
ing farms, of manufecturing goods, of 
making and sailing ships, became so 
high in Spain, from her superabundant 
currency, that she was unable to compete 
with any other nation, was reduced to 
poverty, and never began to recover 
until ' Spain changed her system, en- 
couraged the exportation of the pre- 
cious metals, and thus brought down 
her superabundant currency and in- 
flated prices, and thus enabled Spanish 
industry to sujjply the markets of the 
Peninsula and of the world.' Then^ the 
distinguished historian tells us, 'the 
precious metals, instead of flowing in 
so abundantly as to palsy the arm of 
industry, only served to stimulate it, 
the foreign intercourse -of the country 
was every day more widely extended ; ' 
' the flourishing condition of the na- 
tion was seen in the wealth and popu- 
lation of its cities,' etc. It is a redundant 
currency, even if gold or convertible 
into gold, that produces these evils, al- 
though depreciation adds to the dis- 
astfir--- 

What is the efiiect here of a redund- 
ant currency, is ascertained by refer- 
ence to our exports. By Treasury 
Tables 20 and 21, our foreign im- 
ports consumed here in 1836-7 rose to 
$168,233,675, being largely more than 
double what they were in 1832 ($76,- 
989,793), and nearly double the con- 
sumption, 'per capita., which was $5.61 
in 1832, and $10.93 in 1836. This was 
our great year of a redundant, although 
still a convertible currency, when our 
imports consumed exceeded our ex- 
ports of domestic produce, $61,662,733 ; 
and so enhanced was the cost of living 
and production here, that we actually 
imported breadstufis that year of the 
value of $5,271,576. (Table 1, Com. 
and Nav.) Our bank currency that year 
was as follows : Circulation, $149,185,- 
890; deposits, $127,397,185 ; circulation 



and deposits, $276,588,075 ; loans, $525,- 
115,702. (Treasury Report, 1838, Doc. 
79, tables K. K.) The legitimate result 
of this expansion of loans and cur- 
rency was the great bank suspension of 
May, 1837, and general bankruptcy 
throughout the country. 

Now our bank circulation in 1860 
was $207,102,477 ; deposits, $253,802,- 
129 ; circulation and deposits, $460,- 
904,606; loans, $691,495,580. (Table 
84, Census of 1860.) Yet our jiopula- 
tion in 1860 was more than double that 
of 1837, and our wealth (the true ba- 
rometer, marking the proper rise and 
fall of our currency) had much more 
than quadrupled. (Census Table 35.) 
The proportion of the currency to wealth 
in 1837 was more than double the ratio 
of 1860. It was not the tariff that pro- 
duced the suspension of 1837, for it was 
mucli lower in 1860, than at the date of 
the bank suspension of 1837. 

By Treasury Table 24, our total ex- 
ports abroad of domestic produce, exclu- 
sive of specie, from the 30th of Septem- 
ber, 1821, to 30th June, 1861, were 
$5,060,929,667 ; and, in the year ending 
the 30th June, 1860, were $316,242,423. 
At the same rate of increase from 1860 
to 1870, as from 1850 to 1860, our do- 
mestic exports exclusive of specie in 
the decade ending the 30th June, 1870, 
would have exceeded five billions of 
dollars, had peace continued and the 
currency been no more redundant in 
proportion to our wealth than in 1860. 
But with a redundant and depreciated 
currency our exports must have been 
reduced at least one fourth. "What 
would be the effect on every branch of 
our industry, may be learned by looking 
at Treasury Table 40, showing our do- 
mestic exports for the year ending 30th 
June, 1861. These exports were, of the 
products of our fisheries, $4,451,515 ; 
of the forest, $10,260,809 ; of agricul- 
ture, exclusive of cotton, rice, and to- 
bacco, $100,273,655, and of our manu- 
factures, $35,786,804. This was mainly 
from the loyal States. Now if the for- 
eign markets for our products are re- 



134 



Our National Finances. 



duced only one fourth by tlie effect of 
a redundant currency, inflating here 
the cost of production and of living, 
the result would be most disastrous to 
our industry. The reduction would 
be equal, as we have seen, to $125,000,- 
000 per annum, and $1,350,000,000 in 
the decade. Our imports Avould be 
reduced in the same proportion, and 
our revenue from customs in a corre- 
sponding ratio. Supposing the aver- 
age rate of duties of the present tariff 
to be equal to 40 per cent, ad valorem, 
this would make a difference in our 
revenue from customs of $500,000,000 
in the decade, and, including interest 
not compounded, $635,000,000. And 
here I deem it a duty to say to the 
financial portion of our peace party, 
especially in New York, that our re- 
dundant and depreciated currency, 
with our failure to crush the rebellion, 
and a consequent dissolution of the 
Union, would make reiDudiation inevi- 
table. "We are forced, then, by a due 
regard to our material interests, as well 
as by the higher obligations of honor 
and duty, to subdue the revolt and re- 
store the supremacy of the Government 
in every State. This we can and must 
do. It is due to our country and to 
the world. It is due to the wounded 
and mutilated survivors of the bloody 
conflict, and to our martyred dead, 
murdered by the foulest treason, and 
in the accursed cause of slavery. No ! 
all this blood and treasure must not 
have been poured out in vain. It is 
a question mainly of money and per- 
sistence. Our armies can and will 
conquer the rebellion, if we can and 
will supply the sinews of war. Our 
success is much more a financial than a 
military question. As regards the re- 
sult, the Secretary of the Treasury holds 
now the most important post in this 
contest : he is the generalissimo ; and 
as he is right on this question, and the 
fate of the Union is involved, I deem 
it my duty to give him my earnest and 
zealous support. 

Kuinous as must be the effect of a 



redundant and depreciated currency 
upon all industrial pursuits, the injustice 
to our gallant army and navy, regulars 
and volunteers, would be attended with 
extreme peril. Upon their courage 
and endurance we must rely for success. 
We have pledged to our brave troops, 
who are wounded or dying by thou- 
sands that the Union may live, such 
pay as to enable them while fighting 
our battles to make allotments of por- 
tions of their money for the support of 
their families during their absence. 
"We have promised pensions also. 
These are all solemn pledges on the 
part of our Government, and our faith 
is violated if this pay or these pensions 
are reduced. But there is no difference 
between a law directly reducing this 
pay and these pensions, and the adop- 
tion by Congress of the policy of a re- 
dundant and depreciated currency 
which will produce the same result. 
Every vote then in Congress for such a 
policy, is a vote to reduce the pay and 
pensions for our troops, and to annihi- 
late the allotments made by them for 
the support of their families. "What 
effect such a policy must have on our 
troops and the maintenance of the 
Union is but too palpable. It is dis- 
bandment and dissolution. Every such 
vote is given also to reduce the value 
of the wages of labor, and for increased 
taxation, to the extent, as we have seen, 
of $408,800,000 per annum. It is a 
vote also to reduce our exports and 
revenue from customs, to jjaralyze our 
industi7 ; and finally, in its ultimate re- 
sults, it is a vote against the war, for 
repudiation and disunion, and hence 
every disunionist will oppose the j^lan 
of the Secretary. 

To what extent this redundancy and 
deiKeciation w^ill go, by enlarged issues 
of legal tender treasury notes, we may 
learn from the fact that the banks sub- 
stitute them for coin for the redemption 
of their jjaper. Now, just in propor- 
tion as the issue of treasury notes be- 
comes redundant and depreciated, will 
the bank circulation, redeemable in 



Our National Finances. 



135 



sucli notes, augment and depreciate 
also. This is the law of bank circula- 
tion as now forced upon us by Con- 
gress. It is the law of redundancy and 
depreciation. If this policy is adopted 
by Congress, an enlarged issue made 
of treasury notes, and the plan of the 
Secretary discarded, our bank and treas- 
ury note circulation, with the war con- 
tinued, will very largely exceed one bil- 
lion of dollars before the close of the 
next fiscal year, and both will be de- 
preciated much more than sixty per 
cent. Thus, if we should enlarge our 
issues of legal demand treasury notes 
to $500,000,000, and these be made the 
basis of bank issues, in the ratio of 
three to one, our total paper circulation 
would be $2,000,000,000, such treasury 
notes inflating the bank issues, and 
both depreciating together. And yet 
this is the currency in which it is pro- 
posed to conduct the war and the busi- 
ness of the country. The banks alone, 
by excessive loans and issues, would 
grow rich apparently, on the ruin of 
their country. But there would be a 
terrible retribution. The result would 
be general insolvency and repudiation, 
the debts due the banks would become 
woi'thlesSj and they be involved in the 
general ruin. It is then the interest of 
the banks to sustain the Government 
and the Secretary, and to transfer their 
capital to the new associations. This 
is especially the case with the New 
York banks, which, under a provision 
of their State constitution, have no 
LEGAL EXISTENCE. When repudia- 
tion and bankruptcy become general, 
the cry, like that of a routed army in a 
panic flight, would be raised, Sauve qui 
peut ; we may have again an old and a 
new court party, especially under our 
miserable system of an elective judi- 
ciary ; and the banks be crushed by 
wicked legal devices, as they were in 
the "West and Southwest in 1824 and 
1838. 

Eeferring to bank issues, the Secre- 
tary says, in his last re^jort : ' It was 
only when the United States notes, 



having been made a legal tender, were 
diverted from their legitimate use as a 
currency, and made the basis of bank 
circulation, that the great increase of 
the latter began.' At the present de- 
preciation of these treasury notes, it is 
better for the banks, by one third, to 
redeem their circulation in these notes, 
rather than in specie ; and they need 
keep only one dollar of treasury notes 
for three of bank circulation. This is 
the policy forced upon the banks by 
Congress. But the more redundant 
and depreciated this currency becomes, 
the easier will it be for the banks to 
provide the basis of redemption, and ex- 
IDand their circulation in the ratio, like 
that of specie, of three dollars of bank 
currency for each dollar of treasury 
notes held by them. Thus it is that 
the enlarged issue of treasury notes ne- 
cessarily increases the bank circulation, 
in the ratio of three to one, and thus 
also, that the circulation of bank and 
treasury notes becomes redundant and 
depreciated. Under such a policy, 
every bank then, however loyal its 
stockholders or officers, becomes a 
citadel, whose artillery bears with more 
fearful effect upon the Government 
than all the armies of the rebellion. 
This will soon become obvious, and 
the odium will rest upon the banks, 
their officers and stockholders. But 
the real responsibility will be with 
Congress, who, by such a system will 
"have arrayed the banks in necessary 
and inevitable hostility to the Govern- 
ment. Such, we all know, is not the 
intention of Congress ; but as this re- 
sult will necessarily flow from their 
measures, upon them, in the end, will 
fall the terrible responsibility of the 
disaster. It is this appalling condi- 
tion of our flnances that gives the re- 
bellion its only hope of success, and 
invites foreign intervention. But if 
Congress will adopt the policy of the 
Secretary, they will render certain the 
triumph of the Union, and the rebels, 
from despair and exhaustion, must soon 
abandon the contest. 



136 



Our National Finances. 



"We liave seen how dreadful is the 
disaster which the banks would bring 
on the country by pursuing the pres- 
ent system, and how ten-ible the odium 
to which they would be subjected. 
But now let us look at the result, if the 
plan of the Secretary is adopted. The 
new banks Avould become fiscal agents 
of the Government. Their circulation 
would be uniform, furnished by the 
Government, and based on U. S. stocks, 
the principal and interest of which 
would be payable in gold. The inter- 
est of labor and capital, of the banks, 
the Government, and the people, would 
for the first time become inseparably 
united and consolidated. This is a 
grand result, and fraught with momen- 
tous consequences to the country. 
Eveiy citizen, whether a stockholder of 
the banks or not, would have a direct 
and incalculable interest in their suc- 
cess and prosperity. They, the people, 
would have this interest, not merely as 
holding the notes of the banks, which 
would become our currency, but be- 
cause the banks would hold the stock 
of the Government, would have loaned 
it in this way the money to suppress 
the rebellion, and thus have, saved us 
from a redundant and depreciated cur- 
rency, from inevitable bankruptcy and 
repudiation, and have prevented the 
overthrow of the Union. Each bank 
would then become a citadel over 
which should float the flag of the Union, 
for each bank would then become a 
powerful auxiliary for the support of 
the Government and the overthrow of 
the rebellion. 

The bill divorcing the banks and 
the Government was drawn by me, as 
Secretary of the Treasury, in 1846, to 
enlarge the circulation of specie, and 
restrain excessive issues of bank paper. 
I go for the reunion now, as j)roposed by 
the Secretary, to enable the Govern- 
ment to efiect loans upon theii- stock, 
to prevent a redundant and depreciated 
paper currency, with a correspondent 
increase of expenditures, and to pro- 
vide the means, when the war is over. 



to resume specie payment at the earliest 
practicable jjeriod. I was for restrain- 
ing excessive paper issues then, and so 
*.am I now, as far as possible. I carried 
into full effect then the divorce of the 
Government and the banks, against a 
terrible opposition from them and the 
great Whig party. I made the divorce 
complete, a mncuU matrinianii : so now 
I would make the union complete, so 
far as proposed by the Secretary, for 
the interest of the banks and the Gov- 
ernment would be united, and just as 
you strengthened the banks and in- 
creased their cai^ital and profits, would 
you fund more and more treasury 
notes, and save us from the ruin of a 
redundant and depreciated currency. 
yj The Secretary jDroposes to make these 
banks depositories of treasury notes, 
received by the Government for all dues 
except customs. This is well; for to 
use the sub-treasury to receive and cir- 
culate treasury notes, is against the ob- 
ject for Avhich it was created. Such 
deposits should be secured by U. S. 
stocks with the Government, and thus 
largely increase the demand for this 
stock. During nearly my first two 
years as Secretary of the Treasury, the 
public moneys were deposited by me 
in the State banks, secured by United 
States and State stocks, and there was 
no loss. Nor, indeed, was there any 
loss or default by any officer, agent, or 
employe of the Treasury Department 
during my entire term of four years, 
notwithstanding the large loans and 
war expenditures. 

Disbursing officers should also de- 
posit with the banks, and pay as for- 
merly by checks on them, with the 
same guarantee by them of U. S. 
stocks. How far, and to what extent, 
and under w^hat special provisions the 
gold received for customs might be de- 
posited with these banks, may be the 
subject of discussion hereafter. 

If this system were adopted in its 
entirety, the process of absorbing treas- 
ury notes would commence at once, and 
also a correspondent rise in their mar- 



Our National Finances. 



137 



ket yalue. The system of loans and 
funding saved England from bankrupt- 
cy during her long wars with France, 
and we must resort to similar expe- 
dients. But as loans, in the usual way, 
'except at ruinous discounts, for any 
large amounts, are impracticable, we 
are left to the alternative of the Secre- 
tary's system, or bankruptcy, repudia- 
tion, and disunion. 

I have another suggestion to make 
as regards these notes furnished by the 
Government to the banks, secured by 
U. S. stocks. These notes are guaran- 
teed not only by the stock of the Gov- 
ernment, but, in addition, by the whole 
capital and property, real and personal, 
of the banks, and a prior lien on the 
whole to the Government, to secure the 
payment of these notes. These notes 
are receivable by the Government for 
all dues except customs. These notes 
are a national currency, furnished by 
the nation and secured by its stock. 

These notes then, as in England, 
should be a legal tender in payment of 
all debts, except by the banks. As 
the banks can redeem these issties in 
legal tender treasury notes, these is- 
sues of the new banks ought to be a 
legal tender also, except by the banks. 
There is another reason why this 
currency should be made a legal tender. 
Our two last suspensions of specie pay- 
ments by the banks, viz., in 1857 and 
in 1860, were based upon panics, yet 
they had the same disastrous effect, for 
the time, as if arising irom short crops, 
overtrading, or a currency greatly re- 
dundant. Such panic convulsions are 
caused mainly by the call for the re- 
demption of bank notes in specie, based 
on the fear of suspension and dejjrecia- 
tion. But if su.ch notes, as in Euro- 
pean government banks, were a legal 
tender, except by the banks, such panics 
would be far less frequent here, and less 
injurious. The present system, as com- 
pared with that of Europe, discrimi- 
nates most unjustly against our country. 
As a general rule, the American credit- 
or cannot demand gold from the foreign 



debtor, but such foreign or domestic 
creditor could always demand gold from 
the American debtor. This discrimina- 
tion has produced here the most disas- 
trous consequences, and, independent 
of the present condition of the country, 
our whole banking system requires 
radical reform. "We have had eight 
general bank suspensions under our 
present bank system, many of them 
continuing for years, and producing 
ruin and desolation. Under our jDres- 
ent system, to talk, as a general rule, 
of well-regulated banks, is to talk of a/^ 
well-regulated famine or pestilence, or 
of a well-regulated earthquake or tor- 
nado. And even the few banks that 
are claimed to be well managed, have 
no appreciable effect on the system. 
It is the system that knows no uni- 
formity or security, and never can have, 
as now organized. That a system so 
perilous and explosive, should have 
even partially succeeded is proof only 
oi the intelligence and integrity, gener- 
ally, of the bank officers and directors, 
but no recommendation of the system 
itself. 

The want of uniformity as to com- 
mercial regulations, led to the adoption 
of our Federal Constitution ; and yet 
we have no uniformity as to money, 
which represents commerce and effects 
its interchanges. In this respect, we 
are still suffering all the evils of the 
old confederacy, and have thereby so 
weakened the Government as to have 
invited this rebellion. Indeed, the 
State banks in the revolted States were 
the main auxiliaries of treason and se- 
cession, and supplied, to a vast extent, 
the sinews of war. By Census Table 
34, there were in 1860, 1,642 banks, in- 
corporated by thirty-four States, with 
no uniformity of organization, issues, 
or security. Thus is it that the States 
have usurped the power to regulate 
commerce and currency, and to emit 
bills of credit, in defiance of the pro- 
hibition of the Federal Constitution. 
The Egyptians abandoned their folly 
after seven plagues ; but we have had 



13S 



Our National Fii 



eight bank convulsions, and yet we 
adhere to the wretched system. 

I believe it was slavery caused the 
rebellion, but, in the absence of power- 
ful aid from the Southern banks, the 
revolted States could never have main- 
tained so prolonged a contest. Organ- 
ized as now proposed, these new banks, 
and all who held their notes, must 
have sustained the Government. Na- 
tions expend millions yearly in erect- 
ing forts and maintaining, even in 
peace, large armies and navies to pre- 
serve the Government. But necessary 
as these may be, they would not be 
more important than the system now 
proposed as a security for the pres- 
ervation of the Government. 

My last suggestion is, that as regards 
all such United States loans, as during 
the war shall become the basis of this 
system, the time of payment shall be 
made twenty years instead of five, so 
as, with the modifications above pro- 
posed, to insure the cooperation of the 
banks, and the success of the system. 
As this plan is deemed essential to save 
our finances, to suppress the rebellion, 
and maintain the Union, why incur 
any hazard on such a question as this ? 
In all our wars, including the present, 
we have issued bonds running twenty 
years to maturity, and the bonds, re- 
deemable in 1881, are scarcely at par. 
Why, then, issue a stock of less value, 
which may fail to accomplish the great 
object, when a better security would 
certainly succeed ? I fully agree in the 
opinion expressed by the Secretary, 
against ' a fixed interest of six per cent, 
on a great debt, for twenty years,' if it 
can be avoided ; but I also concur in 
that portion of his report in which he 
says : ' No very early day will jDrobably 
witness the reduction of the public debt 
to the amount required as a basis for se- 
cured circulation.' To that extent, then, 
would I enlarge the time for the maturi- 
ty of the bonds. Surely, if this be ne- 
cessary to secure the cooperation of the 
banks, and the capital of the country, 
there should be no hesitation. Even if 



the system, based only on the bonds of 
short date, should ultimately succeed, 
the loss, in the interim, from a redundant 
and depreciated currency, would far ex- 
ceed any benefit derived from the sub- 
stitution of five-twenties for twenty year 
bonds. By Census Table 35, our Avealth 
in 1850, was $7,135,780,228, and in 
18G0, $16,159,616,068, the ratio of in- 
crease during the decade being 126.45 
per cent. ; at which rate, our wealth in 
1870 would be $36,583,450,585, and in 
1880, $82,843,222,849. Surely, then, 
at these periods, it would be much 
easier to liquidate this debt than in 
1867. But, were it otherwise, the im- 
mediate gain from decreased expendi- 
tures, arising from funding more rapid- 
ly our treasury notes, thus rendering our 
currency less redundant and depreciated, 
with the revival of the public credit, and 
its immediate happy influence. North 
and South, here and in Europe, would 
far more than compensate for any con- 
tmgent advantage arising from short 
loans. Our twenty years' loan is now 
barely at j)ar, and the five-twenties 
below par. The difficulty of indu- 
cing bank and other capital to invest 
hundreds of millions of dollars un- 
der the new system is very great. Is 
it wise to commence the eflbrt, confined 
to our weakest securities, now below 
par ? Besides, considering the old and 
new debts, and constantly increasing 
responsibilities, is there any prospect 
that we will have liquidated all these 
before the end of five years, and the five- 
twenty loan also ? Surely, upon a ben- 
efit so doubtful, and a contingency so 
improbable, we ought not to risk the 
fate of a measure on which depends 
the safety of the Union. But if we 
could pay off the five-twenty loan held 
by the new banks, is it jjrudent to 
assume that so many hundred mil- 
lions of capital will be withdrawn from 
the present banks and other business 
for investment in the new banks, 
which may cease at the end of five 
years by payment of the bonds ? The 
change from the old to the new banks 



Our National Finanoes. 



139 



may involve some loss at first, but, if the 
system may be arrested at the end of five 
years, just when profits might be real- 
izing, the plan could scarcely succeed. 
When the Secretary first proposed this 
system in December, 1861, he probably 
would have succeeded with the five- 
twenties, in the condition at that date 
of the public credit. But the disas- 
trous fall of our securities since that 
date, seems now to require bonds of a 
higher value. 

I would then provide a twenty years 
loan, for all that may be made the 
basis of the new bank circulation. 
But it is not a six, but only a four 
per cent, twenty years' loan that is pro- 
posed, by deducting one per cent, 
semi-annually from the interest of the 
bonds made the basis of this bank cir- 
culation. This deduction would only 
be a fair equivalent for the expenses 
incurred by the Government in furnish- 
ing the circulation, for the release of 
taxes, for the deposit of public moneys 
with these banks, for making their 
notes a legal tender, and receiving them 
for all dues except customs. The tax 
on all other bank circulation should be 
one and a half per cent, semi-annually, 
secured by adequate penalties. 

If, under this system, during this 
stupendous rebellion, involving the ex- 
istence of the Government, with armies 
and expenditures unexampled in history, 
the Secretary (as, with the aid of Con- 
gress and the banks, I believe he can) 
should secure us a sound and uniform 
currency, and negotiate vast loans, run- 
ning twenty years, at par, the Govern- 
ment paying only four per cent, in- 
terest per annum, he will have accom- 
plished a financial miracle, and deserved 
a fame nearest to that of the first and 
greatest of his predecessors, the peerless 
Hamilton. 

The bill organizing the new system, 
presented in Congress by Mr. Hooper 
last summer, is drawn with great abili- 
ty, and it is much to be deplored, that 
(with some amendments) it had not 
then become a law, when it could have 



been much more easily put in operation, 
and would have saved hundreds of mil- 
lions of dollars to the Government. 

But the fifty-fifth section of that bill 
provides that all the banks organized 
under it are to become ' depositaries of 
the public moneys,' excej^ting those in 
'the city of Washington.' Why this 
discrimination ? If there be any place 
where banks, organized under a nation- 
al charter, issuing a national currency, 
and receiving national deposits, should 
be encouraged, it is here. With no 
discrimination against them, such 
banks would be established here with 
considerable capital. And why not ? 
It cannot be intended to discourage 
the establishment of such banks here, 
and thus defeat, to that extent, the suc- 
cess of the system. It is here, if any- 
where, that such banks should receive 
the public deposits, where they could 
be constantly secured from day to day 
under the immediate supervision of the 
Government. Besides, the only effect 
of such a discrimination would be to 
drive such banks to Georgetown, Alex- 
andria, or some other speculative site 
outside the city or District. This city 
has just been consecrated to freedom 
by Congress, and it is hoped that, in 
commencing its new career, no discrim- 
ination will be made against it. In- 
deed, I think it would be wise, in order 
to insure the success here of the new sys- 
tem, to allow the district banks organ- 
ized under this law to receive the same 
rate of interest as is permitted in New 
York. 

I have contended, during the last 
fourth of a century, that all State bank 
currency is unconstitutional. This re- 
bellion will demonstrate the truth of 
that proposition, and the question ulti- 
mately be so decided by the Supreme 
Court of the United States. This, it is 
true, might require some of those 
Judges, if then living, to change their 
opinion on some points ; but this has 
been done before, and even on consti- 
tutional questions ; and State banks 
will fall before judicial action, as well 



140 



Our National Finances. 



as nullification, State allegiance, seces- 
sion, and the whole brood of kindred 
heresies. 

A republic which cannot regulate its 
currency, or which leaves that power 
with thirty-four separate States, each 
legislating at its pleasure and without 
uniformity, abandons an essential na- 
tional authority, and this abdication 
has furnished one of the main supports 
of tlie rebellion. With nothing but a 
national currency, the revolted States 
never could have successfully inaugu- 
rated this war, and we must deprive 
them in all time to come of this terrible 
ally of treason. To permit the States 
to provide the circulating medium, the 
i money of the country, is to enable them 
to farnish the sinev^s of war, and clothe 
them v/ith a power to overthrow the 
Government. 

With only such a national currency 
as is- now proposed, issued by the Gov- 
^ crnment to these banks, organized by 
Congress, and based on the deposit in 
the Federal treasury of United States 
stock, the rebellion would have been 
impossible. Our Government was so 
mild and benignant, that we deemed it 
exempt from the assault of traitors ; but 
this revolt has dissipated this delusion, 
and warned us to provide ^11 the safe- 
guards indicated by experience as ne- 
cessary to maintain the Union. Among 
the most important is the resumption 
by the Government of the great sover- 
eign function of regulating the cur- 
rency and giving to it uniformity and 
nationality. Such was clearly the in- 
tention of the Constitution. The Gov- 
ernment has, by the Constitution, the 
exclusive power ' to regulate commerce 
with foreign nations, and among the 
several States.' But commerce is regu- 
lated mainly by money, and by it all 
interstate and international exchanges 
of products are made. If the currency 
is rerlandant, prices rise, exports are 
diminished; and the reverse follows 
with a contracted circulation. But 
banks inflate or restrict the currency 
at their pleasure, and thus control 



prices, commerce, exports, imports, and 
revenue. But they also destroy or depre- 
ciate the money of the Government, and 
deprive it of a vital power. Thus, the 
nation issues treasury notes, and makes 
them a legal tender : the banks imme- 
diately make such notes the basis of 
bank issues, in the ratio of three to one, 
and the whole currency necessarily be- 
comes redundant and depreciated ; and 
thus this essential power of the Govern- 
ment is controlled by the States, and, 
for all practical purposes, annihilated. 

Chief Justice Marshall, in delivering 
the unanimous opinion of the Supreme 
Court of the United States (4 Whea- 
ton 193), said : ' Wherever the terms 
in which a power is granted to Con- 
gress, or the nature of the power re- 
quire that it should be exercised ex- 
clusively by Congress, the subject is as 
completely taken from the State Legis- 
latures as if they had been forbidden 
to act on it.' Now, it has been de- 
cided by the Supreme Court of the 
United States (9 Wheaton 1) that, 
this power to regulate commerce extends 
to the land, as well as to the water, that 
it includes intercourse and navigation, 
and vessels, as vehicles of commerce, 
that it includes an emlargo which is 
prohibitory, that this power is ' exclu- 
sively vested in Congress,' and ' no 
part of it can le exercised hy a State.'' 
Now, the question, whether the notes 
of a State bank, issued on the authority 
of a State, and designed to circulate as 
money, conflicts with this clause of the 
Constitution, has never leen decided Tyy 
tlie Supreme Court of the United States. 
This is a new and momentous question, 
never yet adjudicated by the Supreme 
Court ; but how they would now de- 
cide that point, with the light thrown 
upon it by this rebellion, I cannot 
doubt. 

The Government also has the sole 
power to lay and collect duties, which 
' shall be uniform throughout the 
United States,' and the States are pro- 
hibited from exercising this authority. 
But this power also is in fact controlled 



Our National Finances. 



141 



by the banks, and the revenue from im- 
ports increased or diminished, accord- 
ing to their action. Indeed, they can 
modify or repeal tariffs at their pleasure, 
for, they have only to inflate the circu- 
lation, and i^rices rise here to the ex- 
tent of the duties, and the tariff be- 
comes inoperative. Of all the branches 
of our industry, the manufacturing is 
injured most by a redundant currency, 
limiting our fabrics to a partial supj)ly 
at home, and driving them from the 
foreign market. Give us a sound, sta- 
ble, uniform currency, sufficient but 
not redundant, and our skilled, edu- 
cated, and intelligent labor will, in 
time, defy all competition. But the 
banks, as now conducted, are the great 
enemies of American industry. 

The Government has also the sole 
power 'to coin money, regulate the 
value thereof,' etc. But the banks now 
regulate its value by controlling prices, 
by substituting their money for coin, 
and by expelling it from the country 
at their pleasure. Recollect, these 
powers over commerce and money are 
exclusive, not concurrent, so adjudicated, 
and the Constitution, in delegating 
*jhem exclusively to the Government, 
withheld them altogether from the 
States. The conceded fact that these 
powers are exclusive, proves that the 
States cannot, by any instrumentality, 
directly or indirectly, control their ex- 
ercise. An exclusive authority neces- 
sarily forbids any control or interfer- 
ence. But there are express prohibi- 
tions in the Constitution as well as 
grants. That instrument declares that 
' no State shall emit Mils of credit.'' 
The State itself cannot emit circulating 
paper : how then can it authorize this 
to be done by a State corporation, which 
is the mere creature of a State law ? 
The State cannot authorize its Oovernor 
to issue such paper : how then can it 
direct a aisliier, deriving all his power 
only from a State law, to do the same 
thing ? Qui facit per aliwji, facit per se, 
and this fundamental maxim of law 
and reason is violated when a State does 



through any instrumentality, created 
by it, what the State cannot do itself 

It is true that a majority of the Su- 
preme Court of the United States, in 11 
Peters 257, did decide that the Bank 
of the Commonwealth of Kentucky did 
not violate that clause of the Constitu- 
tion forbidding States to ' emit bills 
of credit,' but Justice Story, in his dis- 
senting opinion, said : ' When this 
cause was formerly argued before this 
court, a majority of the judges who 
then heard it were decidedly of opin- 
ion that the act of Kentucky establish- 
ing this bank was unconstitutional and 
void, as amounting to an authority to 
emit bills of credit, for and on behalf 
of the State,, within the prohibition of 
the Constitution of the United States. 
In principle, it was thought to be de- 
cided by the case of Craig v. the State 
of Missouri (4 Peters 410). Among 
that majority was the late Chief Justice 
Marshall.' This decision, then, in the 
case of the Bank of Kentucky, is over- 
thrown, as an autJiority, by the fact that 
it was against the decision of the Su- 
preme Court in a former case, and 
against the opinion of a majority of 
the court in that very case before the 
death of Chief Justice Marshall. In 
delivering the opinion of the court in 
the Missouri case (4 Peters 410), Chief 
- Justice Marshall defined what is that 
Mil of credit which a State cannot emit. 
He says : ' If the prohibition means 
anything, if the words are not empty 
sounds, it must comprehend the emis- 
sion of any paper onedium by a State 
Government, for the purpose of covi- 
mon circulation.'' And he also says : 
' Bills of credit signify a paper viedium, 
intended to circulate between indi- 
viduals, and between Government and 
individuals, for the ordinary purposes 
of society.' That the notes of the Bank 
of Kentucky came within this definition 
and decision, is clearly stated by Jus- 
tice Story. In that case also it was ex- 
pressly decided, that if the issues be 
unconstitutional, the notes given for fhs 
loan of tliem ake void. It is said, how- 



142 



Our National Fl 



ever, that the bills are issued by a 
bank, not by the State ; but the bank 
is created by the State, and authorized 
by the State to issue these notes, to 
circulate as money. In the language 
of Chief Justice Marshall, in this case, 
' And can this make any real difference ? 
Is the jjroposition to be maintained 
that the Constitution meant to prohibit 
names and not things ? ' On this sub- 
ject, Justice Story says : ' That a State 
may rightfully evade the prohibitions 
of the Constitution by acting through 
the instrumentality of agents in the eva- 
sion, instead of acting in its oton direct 
name, is a doctrine to vv^hich I can never 
subscribe,' etc. I am conscious that 
Justice Story also said in the same case, 
arguendo : ' the States may create banks 
as well as other corporations, upon 
private capital; and, so far as this 
PROHIBITION IS CONCERNED, may right- 
fully authorize them to issue bank bills 
or notes as currency, subject always to 
the control of Congress, whose powers 
extend to the entire regulation of tlie cur- 
rency of the country.'' It will be ob- 
served, that Justice Story gives no 
opinion as to whether the issues of such 
banks are constitutional, whether they 
conflict or not with the power of Con- 
gress to regulate coin or commerce. 
He only says (and the limitation is most 
significant), they do not violate the pro- 
hibition as to bills of credit (from 
which I dissent) ; but he does declare 
that to Congress belongs ' the entire reg- 
ulation of the currency.'' Now this pow- 
er must rest on the authority of Con- 
gress to regulate coin and commerce. 
But these powers, we have seen, were 
not concurrent, but exclusive; and, in 
the language of Chief Justice Marshall, 
in delivering the unanimous opinion 
of the Supreme Court in the case be- 
fore quoted from 4 Wheaton 193, as 
to any such power that ' should be ex- 
ercised exclusively by Congress, the sub- 
ject is as completely taken from the 
State Legislature as if they had been 
forlidden to act on it.'' All then who 
agree that Congress has ' the entire 



regulation of the currency,' must ad- 
mit that all banks of issue incorporated 
by States are unconstitutional, not be- 
cause such issues are bills of credit, but 
because they violate the exclusive au- 
thority of Congress to regulate com- 
merce, coin, and its value. I repeat, 
that while this question has never been 
adjudicated by the Supreme Court, yet, 
if their decision in fourth and ninth 
Wheaton is maintained, such bank 
issues are clearly unconstitutional. It 
is clear, also, whatever may be the case 
of bank issues, based only ' upon pri- 
vate capital,' or, in the language of 
Judge Story, ' if the corporate stock, 
and that only by the charter, is made 
liable for the debts of the bank,' yet, 
if the bank issues are based on the 
' funds ' or ' credit ' of the State, such 
issues do violate the prohibition 
against bills of credit. Such bank 
issues, then, as are furnished and coun- 
tersigned by State oflScers, acting un- 
der State laws, and are secured by 
the deposit with the State of its 
own stock, are most clearly unconstitu- 
tional. 

In No. 44 (by Hamilton) of the Fed- 
eralist, the great contemporaneous expo- 
sition of the Constitution (prepared by 
Hamilton, Madison, and Chief Justice 
Jay of the Supreme Court of the United 
States), it is said : ' The same reasons 
which show the necessity of denying to 
the States the power of regulating coin, 
prove with equal force that they ought 
not to be at liberty to substitute a pa- 
per medium instead of coin.' Such was 
the opinion of the two great founders 
of the Constitution (Hamilton and 
Madison), and its first judicial exposi- 
tor, the eminent Chief Justice Jay. 
Justice Story quotes and approves this 
remarkable passage, and says ' that the 
prohibition was aimed at a paper me- 
dium, which was intended to circulate 
as money, and to that alone.' 

In his message of December 3, 1816, 
President Madison, referring expressly 
to a lanlc and paper medium, said : ' It 
is essential that the nation should pos- 



Our National Finances. 



14:3 



sess a currency of equal value, credit, lar whicli supported tlie arch will 

and use, wherever it may circulate, stand firm and erect ? No ! if the 

The Constitution has entrusted Con- Union falls. New York will only be 

grass exdmively with the power of ere- the most conspicuous among the bro- 

ating and regulating a currency of that ken columns. 

description.' But New York knows that the path 
This rebellion proves the awful dan- of interest is that of honor and of duty. 
ger of State violations of the Federal It is the Union only that has made her 
Constitution. The rebellion is the great. It is the concentration by the 
child of State usurpation. State su- Union of interstate and international 
premacy, State allegiance, and State commerce in her great city, that was 
secession. And now the Government consummating its imperial destiny. Be- 
is paralyzed financially, in its efforts to fore the Union of 1778 and 1787, New 
suppress the rebellion, by a question as York city was the village of Manhat- 
to State banks, depreciating the cur- tan : destroy the Union, and she will 
rency, and State banks based on State again become little more than the vil- 
stocks. The Government wishes a cur- lage of Manhattan. The trident of the 
rency, not redundant, and to borrow ocean, the sceptre of the world's corn- 
money to save the Union. But one merce would fall from her grasp, and 
State says, we have placed all our sur- London be left without a rival. De- 
plus money in State banks, and another prive the Government of the power to 
State (as in the case of New York) regulate commerce, and the fall of New 
says, we have based the circulation of York will be as rapid as her rise, 
these banks, mainly on our own State Each State then, as before the Consti- 
bonds, and you must do nothing which tution, would control its own com- 
will injuriously affect their value. It merce, and the railroads and canals of 
is true the Union is in danger, but are New York would cease to be the ve- 
not the credit of State banks and State hides of the trade of the nation and 
bonds of higher value than the Union ? of the world. Each State, as under 
The State first, the Union afterwards, the old Confederacy, would force com- 
Our paramount duty is to our State, merce into her own ports by prohibi- 
and that to the Union is subordinate, tory or discriminating statutes. No, 
Why, this is the very langitege of re- when New York takes from the Union 
bellion — the echo of South Carolina the exclusive control of commerce, she 
treason. But it is not the language of commits suicide. One uniform regula- 
the Constitution, which declares that tion of commerce, and one uniform 
"This Constitution, and the laws of currency, are more essential to the 
the United States which shall be made prosperity of New York than to that 
in pursuance thereof, and all treaties of any other State. New York repre- 
made, or which shall be made, under sents interstate and international com- 
the authority of the United States, merce. There are concentrated our 
shall be the supreme law of the land : imports and exports, and there three 



and the judges in every State shall be 
bound thereby, anything in the Consti- 
tution or laws of any State to the con- 
trary notwithstanding." 

The supremacy then, is with the Fed- 
eral Constitution and laws ; otherwise 
there could be no uniformity or nation- 



fourths of our revenue is collected. 
There, if the Union endures, must be 
the centre of the commerce of the na- 
tion and of the world. If the rebellion 
succeeds, the separation of the East and 
West is just as certain as that of the 
North and South. Discord would 



ality. And does New York suppose reign supreme, and States and parts of 
-yiat she can tear down the temple of States become petty sovereignties, 
the Union, and that the priMipa| pil- Liiere pawns, to be moved on the po- 



144 



Our National Finances. 



litical dies3 board by the kings and 
queens of Europe. 

As New York has derived the great- 
est benefits from the Union, so would 
she suffer most from its fall. It is New 
York to whom the Union transferred 
the command of her own commerce, 
and ultimately that of the world. It 
is New York to which England looks 
as the future successful rival of Lon- 
don, and it is New York at whom 
England chiefly aims the blow in 
desuing to overthrow the Union. The 
interest of New York in the price of 
bank or State stock is insignificant 
compared Avith her still greater stake 
in the success of the Union. Indeed, 
if the Union should fall, State and 
bank stock and all property will be of 
little value, and bank debts will gener- 
ally become worthless. 

But if the war continues, we have 
seen that a redundant and depreciated 
currency would increase our expendi- 
tures $408,800,000 per annum. This 
would require a like addition to our 
annual tax, of which the share 
of New Y'ork would be over $50,- 
000,000, and the share of every other 
State in like proportion to its popula- 
tion. 

By Treasury Table 35, the stocks, 
State and Federal, held by the New 
York banks in 1860, was $29,605,318, 
the circulation $28,239,950, and the 
capital $111,821,957. Thus it appears 
that the increased tax to be paid un- 
nually by New York, as the conse- 
quence of a redundant and depreciated 
currency, would be nearly double her 
whole bank circulation, and that thir- 
teen months of this increased tax to be 
paid by the nation, would largely ex 



credit and paper, but depreciates it so 
much as to compel him to pay quadru- 
ple prices, the result being bankruptcy 
and repudiation. 

There is great hope in the fact that 
New York takes no contracted view of 
this great question. She knows that 
her imperial destiny is identified with 
the fate of the Union. Realizing this 
great truth, she has more troops in the 
field than any other State, she has ex- 
pended more money and more blood 
than any other State to suppress this 
rebellion, and she will never an-ay State 
stocks or State banks in hostility to the 
safety of the Union. 

And what of Pennsylvania, that glo- 
rious old Commonwealth, so many of 
whose noble sons, cut off mostly in the 
morning of life, now fill graves pre- 
pared by treason ? Is she to become a 
border State, and her southern boun- 
dary the line of blood, marked by 
frowning forts, by bristling bayon- 
ets, by the tramp of contending 
armies, engaged in the carnival of 
slaughter, ■ and revelry of death ? Is 
New England to be re-colonized, and 
the British flag again to float over the 
chosen domain of freedom ? What of 
the small States, deprived of the se- 
cured equality and protective guaran- 
tees of the Constitution, to be surely 
crushed by more powerful communi- 
ties ? What of the West ? Is it to be 
cut off from the seaboard, and rendered 
tributary to the maritime power? 
What of the States of the Pacific? 
Are they to lose the great imperial rail- 
ways destined, under the Union, to con- 
nect them with the valley of the Mis- 
sissippi and the Atlantic ? But alas ! 
why look at any of the bleeding and 



ceed the whole capital of all the banks mutilated fragments, when all will be 

involved in a common ruin ? 

May a gracious Providence give us 
all, the wisdom to discern what is best 
for our beloved country, in this her 
day of fearful trial, and the courage 
and patriotism to adopt whatever 
course is best calculated to sav^. 
froi»inrpending ruin ! 

1^5 84 



of the United States in 1860. (Cen- 
sus Table 35.) These are the frightful 
results of an irredeemable, redundant, 
and depreciated currency. 

Such a course, on the part of a Gov- 
ernment, which must make large pur- 
chases, resembles that of an individual 
who wishes to buy largely on his owlj 



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